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Power problems to persist

By Tahir Basharat Cheema

Presently the country is racked with demonstrating public protesting against the ongoing loadshedding especially in the industrial cities of Faisalabad, Lahore, Gujranwala, Sialkot, Multan and to some extent Rawalpindi. Other smaller cities have seen disquiet but surely much less in comparison. The fact that most of the above-mentioned cities fall in the province of Punjab has further worsened the situation. On the other hand, the prime minister has taken serious note of the situation asking the Cabinet Committee on Energy Crisis to meet and come up with permanent solutions to the problem, besides mitigating the problem on immediate basis. It is in this very connection that huge moneys are being released to the Pakistan State Oil and independent power producers. According to experts, this would surely help in mitigating the shortages in the short-term. However, ensuring acceptable level of supplies in coming months may turn out to be a hard nut to crack.

In order to come-up with the prognosis for tomorrow, there is definitely a need to look at the broader picture, decipher variables effecting the power sector including issues relating to the present management and the interference from within and without, the sustained rise in international oil prices, the rapidly dropping ability of Pakistani customers to pay the utility bills, the complete indiscipline and non-adherence to the concept of conservation, general low growth of the economy and the disunity and apathy being shown by all classes of people towards any possible solutions to the power crisis ñ especially those which require even a little sacrifice.

Looking into each of the above facets, we see that the rupee is eroding against the US dollar and in all probability would remain weak during the current calendar year. International oil prices are extremely high with the Brent crude oil being quoted at $125 per barrel. The use of furnace oil for power generation is not likely to reduce because the pundits do not see any increase in the availability of natural gas and the met department has predicted 21 percent less waters. We also do not see any scheme whereby dependence on oil could somehow be curtailed or for that matter conversion of power generating plants to cheaper fuels could be undertaken. The last such effort undertaken by the Private Power & Infra-structure Board is known to have floundered. Actually, the present circumstances warrant public sector spending for such a conversion. However, once it is set rolling then surely the private sector would show interest. Though the issue is tangential to the instant subject, it will be of note to inform that the private sector does not show any interest in hydro or coal projects because of the long gestation periods involved in the completion of these projects. Similarly, we see that it has only come into the field of renewable energy after they found that one could get away with quick recovery of equity. This is serious because it only led to high power tariffs and consequently National Electric Power Regulatory Authority, which tried to audit these projects resulting in delayed tariff determinations, cannot be held responsible for tardiness.

Then we see that the management of the power sector comprising of retired and about to be retired professionals (some of them not even posted in their areas of expertise) is not about to be changed. The new boards of the public sector corporations have proved to be sad replicas of the earlier ones ñ no change is envisaged here too. Because 2012 looks to be the last year before elections, the elected governments would be under pressure not to dislodge vested interests and thus the current management would stay on. It is seen that the wayward provincial entities holding on Rs86 billion as electricity payables would continue with their wastefulness and not disciplining themselves ever to make payment to the distribution companies on regular basis. This facet alone is one of the major causes of the current financial crises besetting the power sector. We see that the federal government has to pay Rs7 billion, Azad Jammu & Kashmir government has to pay nearly Rs14 billion, Baluchistan Rs12 billion, Punjab Rs10 billion and the KPK owes Rs20 billion including Rs18.6 billion which the federal government has to pay on its behalf while the government of Sindh has broken all records with payables amounting to Rs50 billion. Not to be left alone, the KESC has to pay Rs55 billion. Incidentally, this privatised entity does not pay anything to NTDC/CPPA; rather, the later only gets paid from the government against the tariff deferential subsidy payable to the KESC. It seems that the current situation is a cozy arrangement for the KESC and it would continue with the same in 2012.

In other words, the burden of all this would also have to be borne by the sector and in extension by the law abiding and bill-paying majority of Pakistani consumers. As the current recovery of electricity bills for the whole of the country is around 83 percent and that no help would be forthcoming to the distribution companies from the provincial authorities for full recovery, it can be assumed that the recoveries would stay as it is and thus keep on feeding the circular debt.

As no change in the present situation is envisaged, the prognosis for the power sector is bleak. The things would carry on in accordance with the earlier times and in a singsong manner. There will be times of succor and then serious shortages. The coming summers as predicted would be hot and sultry with great pressure on the power sector managers. However, things can change with implementation of conservation measures. Due support from the provincial governments to the distribution companies including KESC for curbing electricity theft and ensuring full recovery, at source deduction of the power sector receivables of the provinces by the Federal Adjuster, necessary change in the sector management, start-up of public funded projects to improve upon the present fuel mix and so on. However, not much is visible in this direction; we will have to face a long hot summer.

The writer is president of IEEE Pakistan.

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